Accurate construction estimating is the core of a successful construction business. Inaccurate estimates do more than just cut into profits—they set you up for disputes with clients.
While it’s not uncommon for big infrastructure projects like the Channel Tunnel to come in 50% to 100% over budget, most contractors aren’t building on that scale. Even though economic studies in construction focus on contractors and owners doing billions of dollars in projects, there is plenty of anecdotal evidence that cost overruns are common on even the smallest projects. Sources cite percentage overruns of 9% to 16%. That’s a lot of money, even on a small million-dollar project.
You can point the finger at many causes for budget busting, but you can’t deny that unreliable construction estimating tops the list of reasons for any construction project to exceed the budget. Once you have an efficient place and solid practices for doing estimates, you must also overcome the psychological challenges that overt optimism and enthusiasm bring to estimating construction costs.
Having dealt with those, you face at least five technical obstacles to producing an accurate estimate. Try these five tactics to overcome them:
1. Takeoff right
A cubic yard is not nine cubic feet. No amount of calculating will make a 23-foot-wall fit into a 20-foot 3-inch space. The matter is simple: Inaccurate takeoffs lead to inaccurate estimates. To get accurate takeoffs, you need to ask yourself two questions constantly:
- Is this the correct unit of measurement?
- Is this the correct quantity?
Keeping those two questions running in the back of your mind as you do the takeoff is bound to increase accuracy.
A second tactic for better takeoffs is to use technology when collecting dimensions. Whether you have paper plans or PDFs, there is a technical tool for collecting the dimensions from the plan. These tools remove the potential mistakes of transposing numbers and making calculations using the wrong numbers. All you need to do is focus on ensuring you include all dimensions from the plan.
Focus on just one plan area as you record dimensions. Choose to break the plan into quadrants or work room by room. Either method is fine. However, once you establish your method, stick to it.
2. Create meaningful and realistic WBS
In the ancient world, the master builders kept the secrets of how to combine various components into a completed project. But they were only working with wood, stone, and metal. Today’s builders must become proficient in combining hundreds of different materials, many of which require their own unique methods.
The other complex aspect of estimating construction in modern times is components with multiple assemblies. A wood-framed wall includes several assemblies, a completed building—hundreds. Accurate construction estimating relies on accurate work breakdown structures. Think of them as step-by-step lists telling how to complete each aspect of the project.
A concrete floor needs more than just concrete and rebar. There is the excavation, the formwork, the fasteners for the formwork, rebar chairs, the concrete mix, removal of spoils, form removal, and potentially many other distinct operations and materials required to complete the floor.
As you build your WBS, it helps to visualize all the steps needed to complete a single component. Then, focus on all the required materials, the fasteners, sealants, and insulation necessary. An accurate WBS doesn’t include a tube of caulk without also including the labor to install it. Your WBS doesn’t include a laminated beam without including a machine or labor to install the beam. To make your WBS the most meaningful and realistic, develop it to include the fine details.
3. Find surprises and hidden existing conditions
Construction estimating is loaded with risks, and many of those risks existed long before the owner decided to build something. Across the U.S., for example, there are almost 2,000 sites designated as Superfund Sites on the EPA’s National Priorities List. Wherever there have been gasoline stations, dry cleaners, small industrial sites, waste systems, abandoned landfills, and even cemeteries, you have the potential for hidden environmental existing conditions that may have migrated to the land beneath your project.
But it’s not just pollution you need to investigate. Across the U.S., there are soil conditions that won’t support anything over a single story. Hidden rock structures will quickly spoil your excavation budget. Low-lying land in flood plains might pose remote yet genuine risks. Existing buildings pose their own laundry lists of hidden conditions and surprises.
These days, every region is subject to new climate-related extremes and abnormal weather events. Your construction estimating will be more accurate when you factor in hidden and variable risks that are beyond your control. Sure, you might mitigate them with insurance, granted you identify them first.
4. Account for productivity robbers
Estimating construction labor is one of the most challenging inputs to figure. Multiple factors affect productivity, and productivity determines how long it takes to complete an activity. As you estimate, consider all the factors that will rob productivity and plan to reduce their effects or eliminate them completely.
Cold and heat will sometimes reduce productivity by 50%. Overtime lowers productivity initially by 16%. Crews lacking the correct plans or the correct materials will typically lose 30% of their production time. Congested workspaces, slippery conditions, excessive noise, high wind and dust, and not having the proper tools are all conditions to consider mitigating when estimating construction labor.
5. Use estimating software for construction
To get the best results in your construction estimating, use construction takeoff and estimating software. These programs fit the construction estimating task far better than spreadsheets ever will, and they help you follow a proven process for getting accurate estimates.
If you use Procore as your project management solution, you have access to Procore’s powerful estimating tool. In October, 2020, Procore acquired Esticom, a cloud-based estimating and takeoff solution and leader in preconstruction technology.
Accurate construction estimating is key to building and maintaining a successful construction business. The right software will enable greater accuracy, help you win more bids, boost productivity and lower risk throughout the lifecycle of your project.
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